Tag Archives for acquisitions

The mobile messaging service – which lets users exchange photos and video that disappear after a few seconds – is being courted by Facebook. It has long been an app that CEO Mark Zuckerberg lusted after.

Thursday afternoon brought another turn of the screw. Valleywag reported that Google could also possibly be considering taking a run at Snapchat, matching Facebook’s $3 billion to $3.5 billion offer. Google and Facebook aren’t commenting, but sources said that Google has indeed expressed some interest in a deal. Tencent, the Chinese consumer Internet company, has also been eyeballing the company, according to sources.

I don’t know Snapchat’s fate, and from what I’ve been told, Snapchat CEO Evan Spiegel himself is unsure of it. But it got me thinking – whether they’re in the running or not, which companies are most likely to go after the fast-growing Snapchat?

Let’s go down the list.

Facebook:Zuckerberg wants Snapchat bad. So bad, in fact, that he tried – and failed – to clone the app outright. Sources familiar with the matter have described the Facebook CEO as “obsessed” with Snapchat and the idea of ephemeral messaging. They told AllThingsD that he has made multiple offers to acquire the company, some for more than the $1 billion he paid for Instagram last year.

Likelihood: Very High

Google:Google may have Google+, but it knows it can’t hold a candle to Facebook or even Twitter when it comes to social mobile apps. Buying Snapchat could give Google immediate overnight relevance in social, while simultaneously dealing a blow to Facebook. Not to mention that $3 billion is a pittance for the highly profitable company to spend on an acquisition.

Likelihood: High

Tencent:This is a good fit. Spiegel has described Tencent as a “role model” for Snapchat in terms of revenue models – potentially alluding to in-app purchasing possibilities for the startup.

And Tencent is indeed interested – if not in a full acquisition, then at the very least in a large strategic investment.

Likelihood: Very High

Yahoo:A dark horse, and at this point not an entrant as far as I’ve heard. Still, CEO Marissa Mayer has the cash to make the deal, and is no stranger to acquisitions. Plus, an acquisition of Snapchat could help to both bolster Yahoo’s mobile efforts – which are lacking – and burnish its less-than-cool image – sort of like buying Tumblr did.

Still, there’s no evidence to my knowledge that Yahoo has approached Spiegel or Snapchat about a potential acquisition.

Likelihood: Unlikely

Twitter:After long considering killing off its direct-messaging feature entirely, Twitter woke up last year and figured out that people actually love sending private messages. Another satellite app acquisition – similar to the one it did with Vine – could make sense.

Problem is, the figures being thrown around for Snapchat now are way out of Twitter’s price range. They’re nearly double the amount the company just raised in its initial public offering. At this point, Snapchat is far too rich for Twitter’s blood.

Likelihood: Not at all likely

A caveat to many of the past week’s stories on this topic: It’s possible – if not likely – that the escalating prices and number of companies involved is largely due to jockeying from Snapchat insiders who stand to make hundreds of millions on the deal. Read each new report with that in mind.

Another thing to remember: Spiegel intends to raise yet another round of funding for his company at a hefty valuation. If another round goes through, there will likely be a secondary component to it, in which Spiegel and co-founder Bobby Murphy could sell some of their own shares and cash out. That means the two could still continue to go for broke and build out their own company rather than sell to the highest bidder, while having the insurance of already having taken some money off the table. And according to multiple people close to Snapchat, Spiegel and Murphy very much want to build out the startup into a full-fledged company.

Bottom line: If Snapchat keeps growing – and sources said that is indeed the case – Spiegel isn’t under the gun to make a decision today. If all goes well, his acquisition offers – and the high prices they command – likely won’t disappear.

With the announcement of its proposed $4.7 billion takeover bid, Fairfax Financial Holdings and its chairman, Prem Watsa, answered the long-running question, “Who would ever buy BlackBerry?” But in doing so, it posed a new one, as well: Why? And that’s not a particularly easy question to answer, either.

Just what does Watsa see in the collapsing smartphone pioneer, which just days ago announced a nearly $1 billion shortfall in second-fiscal-quarter earnings and plans to sack 40 percent of its workforce? Something that few others seem to be able to visualize – a long-term play in which BlackBerry successfully reinvents itself? Or is this bid simply a last-ditch effort to put a floor beneath BlackBerry’s tumbling share price in the hope of enticing other potential buyers and saving Fairfax’s investment in the company?

In a Monday statement announcing Fairfax’s offer, Watsa said it was the former, describing the move as one that “will open an exciting new private chapter for BlackBerry.” In that sense, the deal is simply the latest manifestation of Watsa’s faith in what he once described as “Canada’s greatest technology company.”

As Watsa wrote in a March letter to Fairfax Financial shareholders, “The brand name, a security system second to none, a distribution network across 650 telecom carriers worldwide, a 79 million subscriber base, enterprise customers accounting for 90 percent of the Fortune 500, almost exclusive usage by governments in Canada, the U.S. and the U.K., a huge original patent portfolio, an outstanding new operating system developed by QNX and $2.9 billion in cash with no debt, are all formidable strengths as BlackBerry makes its comeback!”

But that was more than six months ago, and in the time since, BlackBerry has slipped deep into the mud that’s been sucking at its boots since it first dismissed the iPhone and Android as credible threats to its business. Sure, the company does have some potentially valuable assets in its patent portfolio and secure messaging platform, BlackBerry Messenger. And there’s a few billion in cash and investments, as well. But BlackBerry is hardly a company poised for a comeback. These days, it’s a sadly diminished pioneer sliding inexorably toward irrelevance.

So, again, does Watsa really believe he can take BlackBerry private and recapture some of its former glory? Certainly possible – if he continues to hold the same long-term view of the company he’s always had. “Is [BlackBerry] going to turn around in three months, six months, nine months? No,” he said last year. “But if you’re looking four, five years. … We make investments over four or five years.”

Maybe that’s Watsa’s game here, as well, assuming Fairfax can actually secure the financing it needs to acquire BlackBerry. Or maybe he’s planning to sell it for parts at some point down the line.

Or perhaps he’s simply doing his best to build some acquisition buzz in the hope of minimizing the potential losses stemming from Fairfax’s 10 percent BlackBerry stake. Also entirely possible. Keep in mind that the “deal” that was announced Monday is not binding – Fairfax hasn’t even lined up financing for it yet, and it gives BlackBerry six weeks to seek other bidders. And to some observers, that reads as damage control on a large and fast-declining investment.

As Wedge Partners analyst Brian Blair told AllThingsD, “Watsa is trying to salvage his 10 percent investment in the company and create a backstop while other potential investors hopefully bid it up. The best evidence of this is that six week due-diligence period and the fact that they are able to shop themselves around in the meantime.”